Japanese automaker Toyota and Shenzhen-based BYD have agreed to set up a joint venture in China to focus on research and development for battery electric vehicles (BEVs), according to announcements on both companies’ websites on Thursday.
Each company will hold a 50% stake in the JV, which will be initiated in 2020. Financial details have not been disclosed.
BYD and Toyota plan to staff the new venture by transferring over engineers and other personnel currently involved in related R&D projects.
With the new JV, Toyota and BYD aim to work together to further develop BEVs for Chinese customers, the two companies said.
This cooperation could help Toyota leverage BYD’s market advantage in China, while BYD could bank on Toyota to tweak its vehicles’ designs for the high-end market. BYD’s BEVs are currently priced as low as RMB 80,000 (USD 11,463).
BYD senior vice president Lian Yu-bo said, “We aim to combine BYD’s strengths in development and competitiveness in the battery electric vehicle market with Toyota’s quality and safety technology to provide the best BEV products for the market demand and consumer affection as early as we can.”
Toyota executive vice president Shigeki Terashi echoed that sentiment by saying, “With the same goal to further promote the widespread use of electrified vehicles, we appreciate that BYD and Toyota can become ‘teammates,’ able to put aside our rivalry and collaborate. We hope to further advance and expand both BYD and Toyota from the efforts of the new company with BYD.”
BYD claimed that since 2015, its sales numbers for BEVs and plug-in hybrid electrified vehicles (PHEVs) have been ranked first in the world for four consecutive years.
However, sales of BYD’s new energy vehicles (NEVs), including BEVs and PHEVs, have been sliding since July, when China’s new subsidies policy for NEVs came into effect. The government decided to cut subsidies for NEV buyers by around 50%.
BYD sold 16,567 NEVs in July, 16,719 units in August, and 13,681 units in September, down from 18,793 units, 21,838 units, 27,903 units, respectively, in the corresponding months in 2018, according to its monthly sales reports.
In return, BYD booked RMB 31.6 billion (USD 4.5 billion) in total revenue in the third quarter, down by 9.2% year-on-year. The company racked up RMB 119.7 million in net losses in the same period, down by 88.6% year-on-year.
Toyota launched the world’s first mass-produced hybrid electric vehicle, the Prius, in 1997. As it has focused on developing HEVs, it has missed out in China’s fast-growing BEV sector, which has enjoyed extensive governmental support.